From this August, Bangladesh is required to pay an additional 20 percent tariff, along with the existing 15 percent, on its exports to the United States. Vietnam faces the same tariff rate.
In contrast, China must pay the highest tariffs, while India is subject to an additional 50 percent. Although Vietnam’s tariff rate matches Bangladesh’s, the country will face higher costs due to transshipment, leaving Bangladesh in a more advantageous position than its rivals, Vietnam, China, and India, in the US apparel market.
India’s garment exporters receive extra policy support domestically, and the country’s emergence as a growing apparel exporter has posed risks for Bangladesh. However, with the US now imposing a 50 percent tariff on Indian products, that challenge has eased to some extent, according to exporters. They argue that the varying tariff structures imposed by the US on different countries have created new opportunities for Bangladesh to expand its exports.
In this regard, Shovon Islam, former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and managing director of Sparrow Group, said it would be unwise to become overly optimistic about higher tariffs on China or India. “Ultimately, such tariff issues will be settled among the big market players,” he explained. India still has until August 27, and there is a strong possibility of negotiations or extensions before then, meaning the announced 50 percent reciprocal tariff may never take effect.
Speaking to Banglanews, he added that instead of relying on tariff hikes against other countries, Bangladesh must focus on strengthening its capabilities. This includes addressing non-tariff barriers within government infrastructure—such as customs, VAT and taxation, banking, ports, the energy sector, as well as delays and instability—that increase lead times.
He further said that capacity building is possible with active participation from all stakeholders. Non-tariff barriers must be removed through collective efforts, and in this regard, BGMEA’s cooperation is crucial.
In April, the United States abruptly imposed a 37 percent tariff on Bangladeshi products. This was later reduced to 35 percent in the first phase, following a 2 percent cut. After negotiations and a non-disclosure agreement, on July 31, Washington further reduced tariffs by 15 percent, bringing them down to 20 percent. As a result, Bangladesh is now paying 35 percent in total, including the original 15 percent.
Alongside Bangladesh, the US has also imposed new tariffs: 20 percent on Vietnam, 50 percent on India, 19 percent on Pakistan, 19 percent on Indonesia, and 41 percent on China.
Bangladesh’s Position in the US Apparel Market
Bangladesh is the third-largest apparel exporter to the United States, which imports around $80 billion worth of apparel annually. In 2024, Bangladesh exported $7.3 billion in garments to the US. The figures for previous years were $5.2 billion in 2020, $7.1 billion in 2021, $9.7 billion in 2022, and $7.3 billion in 2023.
According to the International Trade Administration’s Office of Textiles and Apparel, China holds a 20.82 percent share in the US apparel market, Vietnam 18.90 percent, Bangladesh 9.26 percent, India 5.91 percent, and Indonesia 5.36 percent.
It is notable that nearly 90 percent of Bangladesh’s exports to the US are ready-made garments, while the remaining 10 percent include plastic and other products.
Why the US Market Matters for Bangladesh
As a single country, the United States is Bangladesh’s largest export destination. Data from the Export Promotion Bureau (EPB) show that nearly 20 percent of Bangladesh’s total garment exports go to the US. In the first 11 months of the 2024–25 fiscal year (July–May), Bangladesh earned $36.55 billion from garment exports, of which $7.31 billion came from the US. The US remains a growing market for Bangladeshi apparel.
Although higher tariffs created challenges for Bangladesh’s garment exports, the negotiated reduction to 20 percent has given Dhaka a competitive advantage: it pays less than China, equal to Vietnam, less than emerging exporter India, and slightly more than Pakistan.
Shifts in Global Sourcing Orders
Rising tariffs have already pushed some Chinese manufacturers to shift orders to Bangladesh in recent years, and India had begun to benefit from this as well. However, the new 50 percent tariff on Indian products has placed its exports to the US under severe strain, leading many companies that placed orders in India to reconsider.
This situation has created a relief point for Bangladesh, said Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). “Initially, we were hit with a 35 percent tariff, while India, Vietnam, Indonesia, and Pakistan faced lower rates. Now our rate has gone down, India’s has jumped to 50 percent, and Vietnam is equal to us. This has put us back in a competitive position, almost where we were before Trump’s new tariffs in April,” he told Banglanews.
He added that while India cannot yet match Bangladesh in terms of export volume, it is a potential competitor. With additional advantages, India could have posed a significant risk. The US’s latest tariff policy has temporarily stalled that threat.
Why Caution Remains Essential
Exporters caution that maintaining competitive tariffs is not enough; productivity and production costs are equally critical. Despite facing high tariffs for years, China has boosted productivity through advanced technology, reducing production costs and retaining its dominance in US apparel exports.
Muhammad Hatem, president of BKMEA, said: “Right now, the banking sector is plagued by mismanagement, there is a gas crisis, and we are not receiving expected cooperation from customs. If these problems are resolved, the $55 billion export target is achievable.”
He pointed out that India provides various incentives and package benefits to entrepreneurs investing there. “Despite our current challenges, if we can address domestic issues properly, Bangladesh can outperform India,” he said.
With India facing increased tariffs, many of its export orders are being suspended. These orders, along with some from China, may shift to Bangladesh. But exporters emphasize that this will depend on how well the country strengthens its own capacity and preparedness.
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